The Labour Party's fierce attack on bank profits initially had little impact, but the market is now taking Labour's message more seriously and bank shares are suffering accordingly.
Signs of stress in international currency markets are adding to the unease.
Although many analysts have reduced their profit forecasts for the season starting today, staggering increases, largely reflecting the sharp fall in bad debts, are still expected.
TSB, down 5p to 226p, kicks off the season. It is expected to produce more than £500m against £301m last time.
Barclays, forecast to report £1.97bn against £664m, dropped 13p to 576p; National Westminster, down 11.5p to 476p, should manage £1.57bn against £989m.
Lloyds lost 15p to 540p. It has to contend with ruffled sentiment over its big Latin American exposure, highlighted by the Mexican crisis. Profits are expected to show relatively modest growth - from £1.03bn to £1.18bn.
HSBC, which takes in Midland Bank, has been hit by the ailing Hong Kong share market. The shares fell a further 15p to 666p, lowest for more than a year. They were 1,113p last year. Profits should move from £2.58bn to more than £3bn.
The market failed to hold an early gain, with the FT-SE 100 index ending 11 points lower at 3,049.4. A late futures sell-off did much of the damage.
On the surface the market had its busiest day so far this year. But heavy trading in the leisure tiddler Black & Edgington distorted the picture.
Of the 742.6 million shares turnover printed by Seaq, 115 million related to B&E, which rose from 1p to 2.5p as Ian Gowrie-Smith, ex-Medeva, and the entrepreneurial investor Nigel Wray moved in.
BT continued to crackle, gaining another 5.5p to 407.5p, but Saatchi & Saatchi's woes deepened, with the shares down 4.5p to 107.5. After the market closed British Airways said it had cancelled its advertising contract with the group.
GEC jumped 6p to 295p as stories swirled that the result of the Whitehall inquiry into its prosposed bid for VSEL would be known soon. The rival bidder British Aerospace was unchanged at 432p and VSEL edged forward 2p to 1,380p.
Forte gave up 3.5p to 244p as it was confirmed that Gardner Merchant, where it has a near 25 per cent stake, was in talks that could lead to a takeover by the French Sodexho group.
Carr's Milling put on 10p to 264p on its plan to take over a privately owned food group, NWF. The convenience stores chain M&W fell 24p to 128p on disappointment with the £2.6m profit outturn. But Panmure Gordon thinks the shares a buy; it forecasts profits of £2.9m this year and £3.5m next.
Blue Circle Industries was helped 5p higher to 282p by the stockbroker Albert E Sharp, and RMC, holding presentations, attracted profit upgradings from NatWest Securities and Smith New Court. NatWest lifted its estimates from £253m to £270m and £304m to £320m.
Cadbury Schweppes remained under the cloud of a possible strike for Dr. Pepper/Seven-Up, the US soft drinks group where it has 25.9 per cent. Any deal would almost certainly require a rights issue. The shares fell 7.5p to 423p.
Grand Metropolitan gained 4p to 386p. It held an investment roadshow to present its case for the takeover of the Pet food group.
Danka Business Systems had a late run, up 7p at 384p. A story that the Alcan Aluminium group was preparing to bid caused the excitement.
Insurance shares were firm, with Commercial Union up 6p at 511p. A favourable review of the industry by Robert Fleming Securities provided the impetus.
The Governments's sale of shares in the generators saw National Power rise 6p to 494p and PowerGen 3p to 535p. Northern Electric improved 15p to 1,000p with Trafalgar House, which is bidding for Northern, a shade lower at 73p.
Rank Organisation, figures today, held at 403p. The leisure group is expected to produce £365m against £274.6m.
Haynes Publishing, which relegated itself from the main market to the USM, rose 20p to 338p. Figures are due later this month.Reuse content